Cheetham Jackson - Smart Investment

2 SMART MONEY For decades, the financial services world has been dominated by building societies, banks and insurance companies. And for many years, investors were reasonably well-served and complaints were few. Today, however, things are different. Financial scandals such as the Equitable Life, the banking crisis, and the collapse of Northern Rock have damaged confidence in financial institutions and the trust placed in them has been seriously eroded. In its response to the FSA’s discussion paper DP07/1 the Financial Inclusion Centre stated: “...The scale of consumer detriment in the UK’s long term savings and investment market over the past two decades has been such that reforming the market is one of the most important tests the FSA has faced in its existence. There have been numerous and diverse examples of market failure over the past two decades but these can be categorised into two broad themes: • the litany of high profile mis-selling scandals that have left a legacy of mistrust and undermined consumer confidence in the market; and • lower profile, yet high impact market failures such as over- priced products, distorted competition, churning of products, and huge oversupply of products and providers in the market. The lack of consumer confidence and market inefficiencies have been major contributory factors in the worrying levels of financial exclusion and underprovision in the UK....” Clearly, UK financial services institutions have failed to deliver the quality, value for money and high standards the public have a right to expect. It is high time that change took place. The Financial Services Authority (FSA) has taken action to ‘clean up’ the financial services industry and is taking measures to tighten up regulation and ensure investor protection is substantially improved. The outcome of this action is the Retail Distribution Review (RDR) and is arguably the single most far-reaching development taken in financial services since the Financial Services Act 1986. The world of investment and financial services is undergoing a time of much-needed change Change The problem